Friday, December 23, 2011

Continuing Losses for Mortgage Giant Freddie Mac

Our Oak Park foreclosure attorneys know that the foreclosure crisis in America is continuing to this day.  We all hope that the housing market is on its way back up after a rough few years, but it seems there is still a long way to go before the market is healthy again.

Last month, government-sponsored mortgage giant Freddie Mac (the second largest mortgage lender in the US) asked the US Treasury for another $6 billion dollars after posting its worst quarterly loss in over a year.  That brings the total Freddie Mac taxpayer bailout to $72.2 billion, although it has returned $14.9 billion in dividends.  While in the last quarter the organization received a net interest income of $4.6 billion, it lost $4.8 billion in derivatives alone and another $3.6 billion in credit losses.  Freddie Mac’s CEO Charles Haldeman stated that a lot of these losses are due to hundreds of thousands of borrowers refinancing in the third quarter, which was a great step for borrowers and will help those struggling to make their mortgage payments.  But it also means more losses and less income for Freddie Mac.  And the losses are likely to continue with a revamping of the Home Affordable Refinance Program (HARP).  HARP is expected to allow up to one million more homeowners with Freddie Mac and Fannie Mae loans to refinance at today’s incredibly low interest rates.  To be eligible, the mortgage must have been sold to Freddie Mac or Fannie Mae before May 31, 2009.  There are additional conditions to these loans to make sure they are targeting responsible homeowners, such as you must be current on your mortgage with a good payment history for the last 12 months and the current loan-to-value ratio must be greater than 80 percent.  This type of loan adjustment is often the only viable option for borrowers with low credit scores or little equity left in their homes.

Despite the financial losses, Freddie Mac claims to have helped 48,000 borrowers avoid foreclosure in the third quarter, utilizing things such as loan modifications and repayment plans.  But the mortgage giant’s real estate owned (REO) costs from foreclosed properties skyrocketed, consisting of such expenses as maintaining the foreclosed properties and recoveries from mortgage insurance, which also hurt their bottom line.

Emerson Firm attorneys are experienced at helping clients defend against foreclosure actions.  Our Illinois foreclosure defense attorneys can help you understand the many options that exist out there specifically to help hardworking people keep their homes.  Our attorneys can also explain options to refinance to make it easier for you to keep up to date on your mortgage, like the HARP program discussed above.  We can help you determine the best cause of action and to navigate the regulations to give you the best chance to find a solution for you and your family.

In the spirit of the season, all the Oak Park foreclosure lawyers at the Emerson Law Firm want to wish our clients and friends in the Chicago area Happy Holidays!

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